The empty promises of a cashless society

To proponents of a cash-free society, the survival of the $100 bill is at best an anachronism, at worst a gift to organized crime…

Some people are already calling the note to be consigned to history, and Scandinavian countries want to be on that frontline. Yet, despite the arguments for a cashless society, often described as “futuristic” and “cool”, there are many setbacks purposefully not highlighted.

Sweden is one of the few countries to move forward the “cash-free transition.” In Stockholm, parishioners have started texting donations to their churches and sending money through phone apps. Street vendors carry mobile credit-card readers, and “even the Abba Museum, despite being a shrine to the 1970s pop group that wrote ‘money, money, money’, considers cash so last-century that it does not accept bills and coins” (1).

Paying via apps does seem forward thinking and a much more seamless way of completing money transactions, which is what attract Scandinavian countries to go down that path. Many of the country’s banks already no longer accept or dispense cash.

However, consumers already feeling the repercussions of that change. “Sweden’s embrace of electronic payments has alarmed consumer organizations and critics who warn of a rising threat to privacy and increased vulnerability to sophisticated Internet crimes,” says Liz Alderman of The New York Times.

While it is true that less cash may decrease the odds of bank and ATM robberies, it drastically increases electronic fraud cases. Just last year, the number of these cyber-crimes has doubled what it was just a decade ago. Sweden registered over 140,000 electronic fraud cases, according to the Ministry of Justice.

It is also drastically changing consumers’ lives and daily routines. Some people feel marginalized by the slow transition to a cashless country. The elderly population is particularly concerned. “We see that our government is not taking us (the older adults) into consideration any more. We don’t know how to use these new ways of payment and that really scares me for our future. Last week I went to a local bakery and they told me they wouldn’t take my cash. I will never go there again,” said Ansgar, a 69 year old resident of Stockholm to the Nordstjernan (2).

Besides their own concerns, elderly Stockholm residents are concerned about the youth. “Already a few young people who are used to pay everything via apps started taking out loans via their mobile phones are falling into debt. They don’t know the value of money any longer, only cash could teach them that,” said Agneta, a Swedish consumer association activist.

Human rights activists view a cashless future as a threat to the most vulnerable communities. Besides the elderly, homeless and refugees would be even more marginalized and feel direct consequences of a cashless society. It would also increase the risk of new types of crimes, as these categories of people could not have access to essential services. But besides that, going only cashless creates major threats to people’s individual liberties and to freedom in general. Many are wondering what happened to their right to choose what means of payment to use and how. Others see the electronic and online payments as a threat because of the risk of a gigantic bug that could potentially paralyze a whole economy or lead to more citizens being robbed.

Yet, “it might be trendy” said Bjorn Eriksson, a former director of the Swedish police force and former president of Interpol, “but there are all sorts of risks when a society starts to go cashless” (1). As of 2015, bills and coins only represent 2 percent of Sweden’s economy, compared with 7.7 percent in the U.S. and 10 percent in the Euro area, which means that in 2015, only 20 percent of all consumer payments in Sweden were made in cash; compared to an average of 75 percent for the rest of the world, according to Euromonitor International (3).

In the Swedish countryside, many cash machines are being dismantled, yet many rural area residents don’t have access to other means of payments at local businesses.

Mr. Eriksson, who now heads the Association of Swedish Private Security Companies, accuses banks and credit card companies of trying to “price cash out of the marker” to make way for cards and electronic payments, which would generate fee income and therefore more expenses for the consumers.

“I don’t think that’s something they should decide on their own,” he said. “Should they really be able to use their market force to turn Sweden into a cashless society?”

The voice of the Swedes are increasingly pushing back on a potential cash-free country. Groups and associations have already asked the government to address the issue and to hold a debate to really explore all options and consider their consequences. So far, Sweden’s cash-based economy has been an economic experiment for the Swedes.

But ”what if the machine doesn’t work and people don’t have cash?” says Erika, a small business owner in Stockholm. “Believe me, there are many times that the machine doesn't work… and I’m happy I’m still able to take people’s cash!” Now, let it become a social experiment.

(1) In Sweden, a Cash-Free Future Nears, New York Times, December 26th 2015

(2)Swedish news in English

(3) Established in 1972, Euromonitor International is the world leader in strategy research for consumer markets